On Jan. 9, the Board of Trustees of the Utah School and Institutional Trust Lands Administration approved a “Coal Exploration Agreement with Option to Lease” negotiated with Alton Coal Development LLC (ACD) for about 1,255 acres of state-controlled property in Kane County.
According to SITLA meeting minutes that were out for comment and became final on Feb. 5, the terms of the agreement with Alton Coal are:
- ACD will commit to drill not less than two core-holes within each of the two sections of trust land during the next two years and to share the data with the Trust Lands Administration. The company has indicated that in all likelihood it will actually drill more than two holes per section.
- If ACD determines that the drill hole data warrants mineable and merchantable coal, then the two parties will jointly select a third-party consultant to evaluate the data and determine a fair market value lease bonus payment during the third year of the agreement.
- During each year of the three-year option period, ACD will pay the Trust Lands Administration a holding fee of $1.50/acre, or $1,884 per year.
- If the fair market value lease bonus amount determined by the independent consultant is acceptable to both parties, ACD may obtain a non-competitive Trust Lands coal lease covering the two sections of land by making the fair market value bonus payment to the Trust Lands Administration.
- ACD will pay the total cost of the coal tract valuation by the third-party consultant, and may recoup the cost as a credit against the bonus payment if the lease option is exercised. If ACD elects not to exercise the lease option, then the cost of the third-party valuation is non-refundable.
- The coal lease, if issued, will have a primary term of 10 years and require annual rentals of $3 per acre. The production royalty rate will be 8% for underground coal and 12.5% for surface coal.
Alton Coal, in part controlled Charles and Thomas Ungurean out of Ohio, is developing the Coal Hollow strip mine in Kane County, which supplies coal to the Intermountain Power Agency. A Jan. 15 inspection report from the Utah Division of Oil, Gas and Mining shows that of 636 currently permitted acres, the company had up to that point disturbed 289 acres. The company is also pursuing through the U.S. Bureau of Land Management the leasing of 3,581 acres of coal reserves.
U.S. Office of Surface Mining data shows the owners of Alton Coal as: SH Coal Investment LLC (which is 50-50 owned by the Ungureans), 49%; Robert Nead Jr., 6%; Stonie Barker Jr., 6%; James Wayland, 26%; Alexander Mirrow, 6%; and Anthony Garguilo, 6%.